By Prof. Satya Narayan Misra*
The Finance Minister Nirmala Sitharaman while placing the budget last year in the cusp of acute economic distress quoted Rabindranath Tagore who wrote “Faith is the bird which feels the light when the dawn is still dark”. When she presented the Economic Survey, a year later, her hopes were realised substantially. GDP growth which had nosedived to – 7.7% in 20-21 has increased to around 9.3%. Most importantly, sectors like agriculture and industry have shown remarkable turnaround, with agricultural growth increasing from 3.6% in 2020-21 to 3.9% in 21-22. Manufacturing has bounced back to 14.3% from -7.8% in 20-21. In the service sector, the most affected segment was trade, hotels, and transportation. The dent to its growth from -18.2% has now increased to 11.4%. However, the consumer price index remains an area of concern, exceeding the glide path of 6%.
The Finance Minister in the present budget was therefore expected to provide a booster dose to the economic turnaround. She has exceeded that expectation by write on the economic turnaround by increasing public capital investment by around 35%. Its more than double of the capital expenditure in 2019-20 which was Rs.3.3 lakhs. The other thrust area of the finance minister has been to further digitise India on a massive scale, continue with ECLGS scheme for the SME sector up to 31st March 2023. She is cognizant of the fact that the SMEs provide employment to around 11 crore people, contributes 30% of GDP and 50% of India’s exports. The credit guarantees by the FM in 2020 has benefitted around 1.3 crore people engaged in the SME sector. The other big idea which the FM has spawned is boosting the Production linked incentive scheme in 14 sectors which she hopes will create 60 lakh jobs in the next 5 years. The FM must be complimented for taking initiatives like providing Nal Se Jal to another 3.8 crore households by making an allocation of Rs.60,000 crore. She has also been empathic to the beleaguered housing sector by providing an additional budget of Rs 48000 crores for building 80 lakh new houses.
For the first time the budget has inked a vision map of 25 years to coincide with India’s 100th year of Independence. She plans to conflate three objectives; high growth, inclusive development and fiscal consolidation by bringing down fiscal deficit. The googly in the budget was 30% capital gain tax on crypto currency which will be issued by the RBI. While the RBI Act has still not been amended to include crypto currency as a legal tender, this announcement of finance minister has given legitimacy to digital transaction of crypto currencies. In fact, the discourse on the budget has been hijacked by the digital assets without assessing the impact and fault lines of this year’s budget.
A close look at the planned capital disbursement would reveal that the major beneficiaries would be roads where it has been doubled to Rs 1.8 lakh crore and railways where there is a whooping increase from Rs 30,000 crore in 2021 to Rs 1.36 lakh crores during 2022-23. This is likely to increase the employment potential and the FM hopes that will crowd in private sector investment. Presently except for a few large industries like Reliance, Adani and L&T, most of the big industries are chary of fresh CAPEX. Disappointingly, however, the capital investment in social services has been increased from Rs 10,000 crore last year to Rs 11000 cr for 2022-23. Given our poor infrastructure in govt. schools and dispensaries in both rural and urban India, and complete breakdown of health infrastructure during the pandemic, this lack of allocation priority to health and school infrastructure is disappointing.
India can reap demographic dividend only if its children are provided with balanced nutrition, quality foundational education and assured health care at affordable cost. The ASER brings out how the digital divide between children of the uneducated and the educated has widened further widened. The NFHS V report brings out how more than 50% of adolescent girls suffer from anaemia and 38% children suffer from stunting due to persistent malnutrition. Close to 21% are deprived of nutrition, child mortality is as high as 21.3 per 1000 and around 26% of women do not have access to clean cooking fuel. Sanitation is also not available to around 25% of our population. In this backdrop, the two major goals to achieve zero hunger and no poverty in the SDG seems to be a chimera.
Given these distressing signals in the social sector, one expected the finance minister to make adequate allocation to the mega programmes under social sector. It is distressing to note that the allocation for Mid-day meal programme has come down from Rs 13,400 crore to Rs 10,233 crore in the year 22-23. Similarly, the allocation for MNREGA has come down Rs 1.1 lakh crore in 2020-21 to Rs 73000 crore for 2022-23. As many as 70% of India live in the villages where 75% do not earn minimum wage (SECC Survey 2011) and most of them highly indebted as per NABARD report. In this backdrop, it is most distressing to find that the allocation to rural development has been brought down from Rs 1.13 lakh crore to Rs 77,000 crore only. Public health which received an allocation of Rs 71,000 crore in 2021-22 would now receive only Rs 41,000 crores in 2022-23 .
The World Inequality Report (2022) shows that the average global corporate tax has been reduced from 49% in 1985 to 21% in 20-21. In India, the top ten percent of Indians hold 58% of total income, while the bottom 50% languish with only 7% of total income. The fruits high growth of about 7% since 2000 has been largely hijacked by the top ten percent while the middle class and the poor have suffered severely. The WEP strongly recommends higher tax rate on the superrich, so that it can be utilised for investment in quality education, health care and infrastructure. Instead of adopting such a sensible approach, the government resorts to humongous borrowing. No wonder Tax/GDP of India is a meagre 13%, as against 30% in most developed countries and 18% in China. In her enthusiasm for infrastructure boost, she has turned a blind eye to human development imperatives, rural India and has given kid glove treatment to the superrich.
*The author is a retired joint secretary in the Ministry of Defence. He can be reached through e-mail at [email protected]
DISCLAIMER: The views expressed in the article are solely those of the author and do not in any way represent the views of Sambad English.